The Federal Communications Commission (FCC) has proposed fines against Etheric Communications and GigFire (formerly LTD Broadband), both of which failed to meet their commitments under the Rural Digital Opportunity Fund (RDOF).
Collectively, the two companies defaulted in 7,482 census block groups where they were awarded RDOF bids, leading the FCC to ask for forfeitures that total over $22 million.
The FCC in a new filing said each applicant was “cautioned to craft its RDOF plans carefully to meet all auction requirements and to prepare for any complications that could occur.”
Etheric was declared to be in default after failing to demonstrate that it had been “designated as an eligible telecommunications carrier in each of the geographic areas” for which it sought to be authorized for RDOF support, according to the filing.
The FCC found that Etheric defaulted on 244 areas, placing the company’s base forfeiture at $732,000.
GigFire made up the bulk of the defaulted census block groups, with 7,238. The FCC is asking GigFire for a forfeiture of $21,714,000.
The FCC said GigFire’s application was “lacking in a number of ways,” among them that the company failed to provide proof of eligible telecommunications carrier (ETC) designation, a requirement to receive universal service funds, in three of the states in which it had winning bids.
GigFire also did not show that it had available funds for all RDOF project costs, the FCC claimed, adding that the company “would not be able to meet the initial prerequisites of a new term sheet for a loan and equity fundraising round submitted with its final financial plan.”
“A number of the cost assumptions on which [GigFire] based its deployment costs were unrealistic, raising concerns that the overall determination of deployment costs was too low,” the Commission said.
LTD Broadband rebranded as GigFire this year in a bid to woo private equity investors. While the FCC filing refers to the company by its former LTD moniker, it will hold GigFire jointly liable for the forfeiture, because the two brands have operated under the same CEO, Cory Hauer.
“Accordingly, out of an abundance of caution, we find that LTD and GigFire are apparently alter egos for purposes of liability and thus jointly and severally liable for the proposed penalty,” the filing said.
This is not the first time LTD, or GigFire, has been in hot water with the FCC. In 2022, the Commission hit the company with a $2.3 million fine for backing out of RDOF commitments in Kansas and Oklahoma, a year after LTD requested waivers for several thousand census blocks across 13 states (they argued those locations already have access to sufficient broadband speeds).
The FCC last year also rejected LTD’s $1.3 billion in winning RDOF bids.
However, in an interview with Fierce last spring, Hauer explained the rebranding to GigFire is more than just a name change. GigFire, he said, is an entirely new entity with a plan that includes putting RDOF on a shelf. “Private investment money does not want to hear about a fight with the government,” he said at the time.
Providers defaulting on RDOF bids is nothing new. Last year Charter Communications, who came away with $1.2 billion from the RDOF auction, was asked to pay $1.18 million in fines for defaulting on bids in more than a dozen states.
Operators such as Breezeline and Nextlink have also been fined under the FCC’s order.
The Commission has ordered both GigFire and Etheric to pay the proposed penalties within 30 days or submit a written statement explaining why the penalties should be reduced or canceled.
**Update Dec. 7: Fierce Telecom reached out to GigFire during preparation of this story and did not immediately get a response. But after publication of this story GigFire CEO Cory Hauer reached out, saying GigFire and LTD Broadband are not the same thing. "All LTD Broadband assets prior to the formation of GigFire in March 2023 remain assets of LTD Broadband as will be borne out by the courts," said Hauer. "Since formation in March 2023, GigFire has built over 7,000 FTTH passings that are not assets of LTD Broadband."